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FedEx Freight to Increase Rates

June 8, 2012

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FedEx Freight will increase rates on non-contract less-than-truckload shipments by 6.9% effective July 9.
The LTL unit of FedEx Corp., FedEx Freight is the nation's largest LTL carrier by sales, and other LTL companies will likely follow suit.

This rate change applies to FedEx Freight shipments within the contiguous U.S., between the contiguous U.S. and Canada and within Canada. The rate for cross-border FedEx Freight shipments between the U.S. and Mexico will also increase 6.9% for only the U.S. portion of the shipment, and will be effective July 9, as well.

FedEx Freight will also adjust the minimum charge it imposes on LTL shipments. Additionally, it will likely hike accessorial fees tacked on to the base price of a shipment to reflect the cost of services not related to the core transportation component.

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However, FedEx Freight said it will not change its current fuel surcharge levels as part of the pricing action. The published fuel surcharge rates of the next six largest LTL carriers are at least 23% higher than FedEx Freight fuel surcharge rates, based on the average national price of diesel fuel as of June 4, 2012, says the company.

David G. Ross, a transportation analyst with Stifel Nicolaus, expects most of FedEx Freight's competitors will follow suit with a rate increase in the July-August timeframe.

"While it is supply/demand that will determine how much of this rate increase is actually kept, we believe this is generally a good sign for the LTL carriers," Ross said in an e-mail to investors. "With volumes OK but not great and margins still weak, pricing should continue to trend in the favor of the carriers for the next couple of years, in our view."

The new base rates, rules tariff and fuel surcharge information for FedEx Freight will be available at fedex.com on July 9, 2012.

FedEx previously announced increases to shipping rates for FedEx Express and FedEx Ground, which were effective Jan. 2, 2012.

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